Company: Salzgitter AG
Business: A German steel technology and plant engineering company. They are divided into five units: Strip Steel (high-grade special and branded steels), Plate/Sections (high-grade heavy plate for tubes and wind power plants), Trading (their steel trading unit creating the largest revenue), Energy (wide range of steel tubes and pipes that are focused towards the energy industry) and finally Technology (special machinery and plants for the filling and packaging of beverages).
Active: Largest business is Europe and then the US and Asia but they are present in each continent.
P/E: -17.6
Many of the figures will be bad due to their negative earnings so for instance the P/E is at -176 for Salzgitter but the P/B is excellent with 0.5! Still according to Graham it is not of interest at least not until this cyclic has managed to change the tide and started to earn some money. Earnings to sales are at -1% so bad. ROE is at -2.8 and the ratio for book to debt is so, so with 0.7. In the last five years they have had a yearly growth of -3.6% (please keep in mind that 2008 was an excellent year and they earned 12 €/share) the motivated P/E becomes something between 8 to 10. They pay a tiny dividend of 0.8% which they might as well could have skipped...
Conclusion: A cyclical possible turnaround company that will one day in the future when infrastructure and building starts up in Europe and the US again then Salzgitter will also have much better results. Graham would not have stepped in and neither would I as it looks today but it does indeed look like a classic turnaround but the question is always when?
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